Altimmune Inc

Altimmune Inc (NASDAQ: ALT) is a US-based Pharmaceuticals & Biotechnology Company. The Company is engaged in research and development of products to improve immune responses for the treatment of disease.

Investment Highlights - Altimmune Inc – Speculative Buy at USD 14.12

• The Company’s financial performance was boosted by CARES act, as it provided the number of tax provisions and stimulus measures.
• In the last one year, the Company delivered a significant return of ~665.08% and delivered higher returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales multiple of the Altimmune Inc is currently lower as compared to the corresponding multiple of the Biotechnology & Medical Research industry. It reflects, shares are undervalued as compared to the industry.
• From the technical standpoint, shares were trading well above the support level of 20-day simple moving average prices (USD 12.49), which reflects an uptrend in the stock and can move up further.

Key Risks

• The Company needs to comply with stringent regulatory policies, and failure to do so could result in penalties and fines.
• It operates in a competitive environment, and losing market share can affect the growth trajectory.

Financial Highlights – Q3 and 9M FY2020 (30 September 2020) (released on 9 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter and nine months period of the financial year 2020, the Company witnessed a significant increase in revenue, driven by higher grants received by MTEC, BARDA and NIAID.
• Due to higher R&D and general and administrative expenses for the period, the profitability declined significantly.
• The cash balance as on 30 September 2020 increased to $143,495,266 (31 December 2019: $8,962,686).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

The Company has shown a decline in financial performance in the third quarter and nine months period of the financial year 2020. The Company witnessed a significant increase in revenue and cash balance for the period. ALT’s operational performance was not materially impacted by the impact of the covid-19 pandemic, while it resulted in the delay in clinical trials, increased costs and disruption in the supply chain. The Company continues with regular interactions with the FDA and other regulatory agencies to gain timely approvals for ALT-801, AdCOVID, NasoShield and T-COVID. The stock made a 52-week low and high of USD 1.60 and USD 35.10, respectively.

Based on the decent growth prospects, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Altimmune Inc at the closing price of USD 14.12 (as on 8 January 2021), with lower double-digit upside potential based on 10.22x EV/NTM Sales (approx.) on FY21E sales (approx.). 

*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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